Unite had indicated that employees would not be appealing (see my earlier blog). Not surprisingly, the employers have also decided not to appeal. At the time the decision was issued it was suggested that in football terms the result was a 1-1 draw. This is because employees, in certain circumstances, are likely to benefit from enhanced holiday pay, whilst some employers were relieved that the decision is likely to limit the risk of historic, back-dated claims for a series of unlawful deductions in the Employment Tribunal. For employers facing potentially large back-dated claims it is arguable that the outcome to them is more favourable in relative terms. However, the CBI has still estimated that for many employers the decision could add between 2-4% to their payroll bill.
If a claim forms part of a series of unlawful deductions (with no gap of more than 3 months between each deduction) then it will be time barred unless it is raised in an Employment Tribunal within 3 months of the last deduction. This assumes the EAT's decision will not be successfully challenged at a later date. This seems unlikely as Unite have indicated that they did not pursue an appeal because it could have affected employers' economic viability. Other unions are likely to follow suit. This of course leaves aside the merits of the EAT's reasoning in reaching its decision which would be hard to overturn on appeal. There is still the undecided separate issue of whether the courts would allow a holiday pay claim to be separately pursued as a breach of contract claim which would have to be brought within 5 or 6 years in Scotland and England respectively.
There is the added complication of the 3 month time limit for bringing ET claims being extended to take account of the Early Conciliation process (which goes beyond the scope of this blog).
The issue of what constitutes a series of deductions can in itself give rise to debate. This is probably the reason why the Tribunal claims in the lengthy British Airways litigation, which sparked off the current debate about holiday pay, were re-lodged every 3 months. In that case it had been held that pilots were not receiving their full entitlement to holiday pay. Their claims were re-submitted as fresh claims in the Tribunal at broadly 3 monthly intervals to avoid a potential time bar argument.
The Presidents of the Employment Tribunals in England and Wales and in Scotland have now issued a Direction that will avoid the practice adopted in the British Airways case. This Direction indicates that if an unlawful deductions claim for holiday pay is lodged on time then future claims for non-payment can be brought by amending the existing claim without having to raise separate claims.
The Guidance suggests that an amended claim should detail all of the facts of the claim (case number, claimant(s) and respondent(s)) and the particulars of the claim - the dates or periods of non-payment being raised, the basis of such a complaint and the amount claimed for. An application for amendment should be copied to the Respondent to allow them to provide any written comments to the Employment Tribunal within 7 days of receiving notice. The application to amend will then be considered by an Employment Judge.
This allows employees to lodge a holiday pay claim for unlawful deductions, subject to the rules, without incurring further Tribunal Fees. There is an issue fee for lodging the initial claim and a hearing fee. There is no fee for lodging an amendment. This has all occurred in the very same week when the Appeal Court has rejected the second attempt by Unison to successfully seek a judicial review of the Government's introduction of the Employment Tribunal Fees system in July 2013.
It was argued that the introduction of Tribunal Fees has acted as a significant disincentive to bringing claims, especially relatively low value claims. Many individual holiday pay claims would fall into this category, although their cumulative impact on a large employer could be significant if many claims were lodged at the same time. If a class action was brought by non unionised Claimants then the impact of fees is reduced as a single fee, whose payment is shared by many, is far lower than the fee for lodging an individual claim. Importantly, trade unions who support such claims will normally underwrite their members' fees, sometimes subject to a loan agreement.
The broader issue of further challenges to the Tribunal fee system is likely to continue well into 2015. However there is now at least some much needed clarity on certain key holiday pay issues and how such claims will be handled by Tribunals.